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Can a niche drop-ship site be profitable? If so, what are some specific examples, and how to they genereate revenue?

  • This recent Reddit thread is a lengthy conversation started by someone who claims to make a six-figure living off a basic drop-ship sites set up for niche products/audiences. http://www.reddit.com/r/IAmA/comments/se78n/i_make_over_100k_per_month_running_dropship/ I'm wondering about the validity of their claims. Are there specific examples of small, niche e-commerce sites that function through drop-shipping and generate real revenue? Or, is this more of a "get rich quick scheme"? I'm skeptical that today's web shopper would buy through a random small e-commerce site, rather than a major e-tailer like http://Amazon.com

  • Answer:

    I would venture to guess that not many people are going to give up their exact numbers from a analytics screen shot or paypal monthly history report, myself included, at the expense of validating people's online opinions into their business. The extent of that poster's answers give very good credibility into what he's doing, it all sounds exactly right. I will say that yes, it is definitely possible to create that type of income through niche sites, the business model is identical across any industry, easy to replicate. I've done it through automotive, and i'm currently building another site in the related automotive space grossing 30k/mo after 6 months, and that's working very part time on the side. http://Autoanything.com is a site that started heavily, and still does, a ton of drop-shipping. They're the 800lb gorilla in the automotive market, taking out 5-10 pages of print advertising in the major print publications every month, and dominating the attention of many manufacturers that i deal with directly, so not only am i competing against them online, but also behind the scenes for product availability. EDIT NOV.2013 - Autoanything.com just got purchased by Auto Zone, undisclosed price. Autoanything had sales of $111 million in 2011. http://Hardwaresalesinc.com was doing dropship for a long time, but i've lost touch with my contact there, so i dont know how they're doing recently. There's countless examples, and they all have an advantage over http://amazon.com for the time being; specialization and knowledge. Their customer support regarding the parts exceeds anything that amazon would be able to provide, so it comes down to trust. And sometimes, Amazon just isn't known for certain things beyond their low prices, you aren't going to go to Amazon to buy CNC machining tools, or wheels for your car, or small hardware (though, amazon just bought a company, transforming it to http://amazonsupply.com that does just that). Also, the great stores now are generating content that drives traffic, and their advertising is much more focused than what Amazon does. Amazon may be the online Walmart, but would you go to Walmart if you needed help and guidance regarding a DIY project at home, or would you go to Home Depot / Lowes and talk to their experts? Some of us would get the knowledge in one place, and buy the parts on Amazon for maximum time/money savings, but a very small percentage of buyers are that educated.

Sean Reyes at Quora Visit the source

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I think drop ship is the future of e commerce and not just because I own a company, http://HonestGreen.com, that drop ships green/eco products. We have over 1,000 etailer customers and many of them are names you probably never heard of. But the secret sauce of etailing is getting targeted traffic to specific items in your store. I see etail partners comment on a positive review of a eco product with a link to the item and they sell 100s of them without paying a penny to Google for Ad Words. There is no doubt many people buy thru Amazon because their account info is on file and they have Prime membership.  However, people want more than http://Amazon.com online and Wal-Mart offline. Have you every emailed or spoken to a HUMAN at Amazon?  I didnt think so. Our niche etailers seem to thrive on personal interaction and fast response to their prospects and customers. And there is help on the way in terms of SINGLE CLICK CHECK OUT for small etailers to link their API to so customers do not have to fill out some big form with billing and shipping address.

PJ Stafford

I think it's more possible if you have that unique, niche product. If you use ready-made products from wholesalers it's harder because there will always be other stores out there that can undercut you by using the same wholesaler. However, if you use a print on demand drop shipping like Printful (full disclosure - I work for Printful) http://theprintful.com you can print your unique designs on products that customers will not be able to get anywhere else. Check out stores like http://sansform.com that has really mastered this with their unique designs. Or artists like Zen Pencils http://shopzenpencils.com/

Davis Siksnans

It's definitely possible and not even really that uncommon. I started my site http://www.customgamesource.comby manufacturing some of my own products but quickly found that it was much simpler to move to a drop-shipping model. The products I sell through that site are now almost all drop-shipped. I have several other sites now that use the same model. The benefit of drop-shipping is you don't have to sink money in inventory, so you can experiment with different products, marketing methods, etc until you find something that works, then double down on that. Your margins are lower but you can expand your product offering much faster, and the entire business is much simpler to run.

Matt Coughlin

I was the owner of a highly successful e-commerce startup that used dropshippers for our 10,000+ products. We converted from stocking products in-house to fully converting to a dropship model. I can outright confirm that if done right, a dropship model can generate millions of dollars in revenue and be highly profitable.

Chester Ku-Lea

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